Sylvania Platinum operations return after hard Covid lockdown

Sylvania Platinum said on Monday that its dump operations had been running at full capacity since June, after lockdown regulations were implemented to prevent the spread of Covid-19 between 27 March and 30 April, which placed them on care and maintenance.

The AIM-traded firm said the Sylvania dump operations declared 9,055 4E platinum group metals ounces in the fourth quarter, down from 19,968 ounces in the third quarter, as a result of the impact of hard lockdown and the gradual ramp-up to full production, in accordance with amended regulations.

That resulted in a total of 69,026 4E platinum group metals ounces for the financial year ended 30 June.

The dump operations recognised $13.2m in net revenue for the quarter, while cash costs per 4E platinum group metals ounce increased in rand and dollar terms to ZAR 17,008 and $948 per ounce, from ZAR 8,673 and $565 in the third quarter, due to reduced production and a high proportion of fixed costs.

A positive EBITDA of $4.2m was reported in the three months ended 30 June, despite the drop in ounces and its consequent effect on operational costs in the fourth quarter, while net profit fell to $2.2m from $25.3m in the third quarter, due to lower production.

Sylvania bought back a total of 5.6 million ordinary shares at a total cost of $3.4m during the period, and it had a cash balance of $55.9m after share buybacks.

“There is no denying that the unprecedented nature and circumstances under which the operations performed during the past quarter is one to go down not only in the history of the company, but in industries worldwide,” said chief executive officer Jaco Prinsloo.

“The Sylvania dump operations produced 9,055 4E platinum group metals ounces for the quarter, despite an almost six-week interruption related to the national lockdown to prevent the spread of Covid-19 in South Africa, and associated restrictions and limitations placed upon the subsequent start-up in May, with progressive ramp-up to full production in June.

“As a result, the company is pleased to report that it has produced 69,026 ounces for the financial year.”

Prinsloo said the South African government-imposed lockdown, and the consequential placing of plants on care and maintenance, until the hard lockdown ended, inevitably had a “significant” impact on both production and costs.

“However, the company is in the robust position of having sufficient cash reserves to mitigate against the rise in costs and the possible reduction in future cash inflows due to the ongoing situation.”

At 0915 BST, shares in Sylvania Platinum were up 4.26% at 48.9p.